Sri Lanka tourism a casualty of Tamil Tiger war

Sipping ice-cold drinks on the lawn of the oldest hotel in Asia, tourists watch the sun slip down behind the Indian Ocean. White-coated waiters scoot from table to table serving lobster. The Galle Face is almost absurdly idyllic for a hotel smack-dab in the middle of Sri Lanka's capital, Colombo.

Almost. Just off shore, a black boat bobs, its guns silhouetted against the darkening water. It is a Navy vessel, guarding the shore from attack. Soldiers peer from a concrete tower beside the pool. Another watchtower looms over the seafront restaurant. And on the road from the airport, taxis are stopped at successive military checkpoints.

But nowadays, far fewer visitors are traveling that road.

Tourist arrivals nose-dived 24 percent in the first six months of this year as Sri Lanka, an island of lush greenery and palm-fringed beaches, saw some of the worst fighting in years.

The conflict has been raging since 1983, when the Liberation Tigers of Tamil Eelam, known as the Tamil Tigers, launched their violent secessionist struggle. Since a cease-fire signed in 2002 collapsed last year, more than 5,000 people have been killed.

The renewed fighting is a blow for Sri Lanka's tourist industry, which is still recovering from the 2004 tsunami that killed 35,000 and wrecked hundreds of hotels on the southern and eastern tourist coasts.

But most of the recent damage to tourism was done this March, when the Tigers' fledgling air wing made its debut, bombing an Air Force base near the only international airport and then oil facilities near the capital.

No foreigners were injured and neither side in the conflict says it has any interest in harming foreigners: the government is heavily dependent on foreign aid and the Tigers on funding from émigré Tamils.

But after the bombings, several airlines restricted their flights and night arrivals were stopped for weeks. Foreign embassies advised their nationals not to travel to certain areas and some overseas travel agencies omitted their normal gushing endorsements of Sri Lanka from their brochures.

Hopes that tourism would rebound were dashed on Oct. 16 when Tigers overran a military post inside the island's most popular wildlife sanctuary, in the southeast – an area traditionally considered safe. The attack, in which seven soldiers were killed, took place days before it was due to be opened for the tourist season.

Three days later, the US State Department warned its citizens not to travel to northern and eastern Sri Lanka, where fighting is heaviest. It didn't specifically warn against travel to Colombo or the beaches in the south. But it did note "dangers posed by recent acts of terrorism throughout Sri Lanka."

Tourism accounts for around 3 percent of Sri Lanka's gross domestic product according to Danushka Samarasinghe, manager of research at Asia Securities in Colombo. But it is an important source of foreign currency, after tea, textiles, and gemstones.

"In indirect ways, tourism makes an extremely significant contribution to the economy," he adds. The income tourists provide to farmers, taxi drivers, even sarong sellers on the beach, means that the livelihoods of more than 1 million of Sri Lanka's 20 million residents benefit from it.

A rickshaw driver on a busy Colombo street, confirms, "There are no tourists – it's very bad." "And everything's so costly now," he adds, referring to inflation rates that have touched 20 percent. Interest rates have also risen.

His passenger safely on board, the driver attempts, mid-journey, to renegotiate his fare upward, pleading hungry children and rising fuel costs.

Sri Lanka's hotels have taken the opposite approach by lowering their tariffs. Rooms that fetch $250 in neighboring India can cost $50 in Sri Lanka.

"So hotels might be filling their rooms now [at discounted rates]," observes Harsha de Silva, an economist with LIRNEasia, a Colombo think tank, "But at what cost?"

Mr. Samarasinghe of Asia Securities adds that a vibrant tourism business brings in potential investors, which is what the country needs badly now.

Though Sri Lanka's wider economy has proved resilient through the conflict – with growth of 7.4 percent last year – new figures show some signs of war damage.

In September, the central bank lowered predictions of economic growth for the full year to below 7 percent. International banks said this was optimistic: the Asian Development Bank forecast growth would be around 6 percent.